Tight Inventory Caused Homes to Sell Quickly in April

The U.S. housing market has so few homes for sale that when properties list, they're selling within weeks, or sparking bidding wars that drive up prices above asking.

Amid high mortgage rates, would-be sellers are feeling locked in to the low rates they had when they bought their home, causing inventory to shrink, according to Redfin. During the four weeks ending April 30, 48% of homes that sold went under contract within two weeks, up from 46% the month earlier.

Historical data typically reflects declining sales in April, after the March peak. But experts say 2023’s typical spring peak has yet to arrive. At the same time, the amount of equity Americans have in their homes is declining. The portion of mortgages that were considered equity-rich dropped from 48% to 47.2% in the first quarter.

Still, homebuyers could be feeling more confident after the Federal Reserve this week signaled that a pause to interest rate hikes could come soon.

“While a pause in Fed rate hikes doesn’t mean a significant drop in mortgage rates is coming, it does at least alleviate one layer of uncertainty in the housing market,” said Redfin Economics Research Lead Chen Zhao. “Unexpectedly bad inflation data, more banking turmoil or failure to raise the U.S. debt ceiling could throw a wrench in the Fed’s plans, but homebuyers and sellers can feel a little more confident that mortgage rates won’t skyrocket again.”

Bucking typical spring trends that show housing inventory on the rise, the total number of homes for sale declined over April. Buyers taking homes off the market outpaced the number of homes being listed. 

“A lot of homeowners are just now expressing interest in selling, whereas in a typical year that would have happened a month or two ago,” said Steve Centrella, a Redfin Premier agent in Washington, D.C. “Some sellers are coming forward because they’re noticing there are buyers out there, in spite of high rates. A lot of them are sellers who aren’t also buyers, like people listing a second home or rental property. They’re not as hesitant to give up a low mortgage rate because they’re not turning around and taking on a higher one.”

New listings in April were down 23% from a year earlier, the second biggest decline since the start of the pandemic.

Year-over-year, pending sales dropped 17%.

Home Sale Prices Dip

By the end of April, the median home price was $368,918, down 2.7% from a year earlier. April brought the 10th straight four-week period of declines. 

Prices dropped in 32 major U.S. metros, with the biggest drops in Oakland, Austin, and San Francisco. Still, 31.3% of homes sold above their final list price, the highest share since September, but down 53.9% from a year earlier.

The monthly mortgage payment on the median-asking price home was $2,555, just shy of the $2,557 record hit during the prior week. 

Mortgage purchase applications during the week ending April 28 dropped 2% from the week before.